Point: Additive manufacturing (also called 3D printing) technologies enable new design methods and local manufacturing by entrepreneurs.

Story:  When designing a new part to be manufactured, designers traditionally had to define the shape they wanted and then pick the material that could support that shape (based on strength, flexibility, etc.). That is, they designed the piece separate from picking the materials. For more complex products, designers had to decompose the product into semi-independent parts that were designed and manufactured separately and then assembled with screws, welding, clips, glue, and so on.  This deconstructive process risked incompatibilities between the parts, added complexity, and increased costs due to a assembly labor.

But, nature does not design in this deconstructive way. A tree trunk, limbs and leaves aren’t built separately and assembled. Rather, nature designs and grows the entire tree in a progressive, additive fashion, and largely from one material. Nature starts with a material (e.g., cellulose is the material for trees) and deploys that material in various densities, shapes, thicknesses, and modified formulations to create an integrated object.  The same basic building-block material that makes the thick rigid truck of a tree also makes the broad, flat leaves of the tree, thin flexible twigs, and hard shells of the tree’s nuts.

Additive manufacturing mimics nature (unlike traditional reductive manufacturing that removes material to make a form).  Additive manufacturing can build almost any shape that can be drawn on a computer, including hollow and contorted forms impossible to make in other ways. Specialized machines (essentially 3D printers) lay down layer after layer of material or draw with a bead of molten material to grow the part the 3D shape that was downloaded from the computer. Virtually anything that someone can imagine, draw or compute in 3D can be made with additive manufacturing.

Several competing 3D printer technologies let designers and manufacturers choose between clear resins, colored opaque thermoplastics, powered metals, and even powered ceramics.  Companies can use the technology to create prototypes, customized shapes, spare parts, and intricate parts in low quantities.  For example, Boeing used metal hybrid additive manufacturing processes and powdered metal manufacturing to create parts that reduced the weight and fuel consumption of its aircraft.

Although industrial printers like Boeing’s cost upwards of $500,000, consumer-grade printers cost only $1300.  The low price point creates a vast new opportunity for entrepreneurs to provide 3D printing services.  For example, online service company Shapeways prints any design that its customers upload, from fashion and jewelry pieces to gadgets and art. Even better, Shapeways lets is members open virtual storefronts on the site to sell their products. Some of the most popular products for sale include a PirateBay ship model, a Dymaxion world map, and a customized metal branding iron that will brand any text you want when attached to a BIC lighter. In addition, open source communities (such as MakerBot Industries, RepRap, Thingiverse) are dedicated to creating ultra-low cost printers and sharing designs for cool additive manufactured parts.

Action

• Think about how in-house 3D printing (or in-home 3-D printing) might change your business.
• Design new additive manufactured products based on shapes that would be “impossible to build” with traditional manufacturing.
• Create new business models based on products or services that support additive manufacturing or that transcend the curse of economies of scale needed by traditional manufacturing

Point: If you’re looking for a new business opportunity, look for individually-fragmented but collectively large areas of economic activity, such as where individuals or small business own a large segment of the market

Story: A business model that connects small businesses and individuals to markets and automates tedious tasks was common to three of 11 new start-ups seeking  funding at Techstars Demo Day August 5, 2010. Here are their stories, followed by six action steps you can take to tap such markets.

Rentmonitor.com helps small-scale landlords. These landlords collectively own 30 million rental units in the US.  Rentmonitor offers an online service that automates many elements of the five key tasks that every landlord faces: 1) advertising available properties; 2) screening renter applications; 3) managing maintenance requests; 4) tracking rental payments; and 5) record-keeping for taxes. In exchange for a monthly fee of only $5-$50 (depending on the number of units), Rentmonitor gives the landlord a suite of online tools to manage their properties. Renters also have access to Rentmonitor to submit a maintenance request or make an online rent payments.

VacationRentalPartner.com addresses the needs of vacation homeowners who rent out their properties when they are not using them. Currently, many vacation homeowners pay a 30% to 50% cut out of their rental revenues to property managers. VacationRentalPartner.com replaces that high-cost property manager with low-cost online services to handle advertising, booking, and housekeeping and maintenance contractors. Although VacationRentalPartner seems similar to Rentmonitor, the two start-ups differ significantly because the needs of ultra-short-term vacation property owners differ significantly from the needs of long-term lease-based landlords. For example, VactionRentalPartner has tools to help fill-in unrented days, such as by promoting off-season rentals to prior guests or with special deals to already-booked renters if they extend their stay to covered the unrented days. VacationRentalPartner also emphasizes the benefits of fast automated responses to booking inquiries. Would-be vacationers expect instant replies from property holders — a less-than-30 second response time to an availability inquiry increases bookings by 200%.

AdStruc.com targets outdoor advertisers with an auction and listing-based marketplace for the buyers and sellers of billboard space. Adstruc address the fragmentation of national, regional, and local billboard site owners that make it hard for advertisers, especially national advertisers, to find and buy the best billboard sites for a large campaign. AdStruc aggregates billboard sites and provides searchable data on available inventory.  AdStruc gives buyers virtual visits to billboard sites through Google Streetview. AdStruc also partnered with Circle Graphics on the printing and shipping of the extremely large format. AdStruc supports the sellers, too, in managing their inventory. “This-space-available” and obsolete signs represent $750 million a year in lost revenue. With AdStruc, sellers can upload their available spaces, automate sales to approve buyers, and auction off space. AdStruc makes money on a share of the transaction fees as well as monthly service fees for managing billboard inventories.

Action

1. Look for individually-fragmented but collectively large areas of economic activity, such as where individuals or small business own a large segment of the market
2. Find the “pain points” in the lifecycle activities of these market participants (e.g., advertising vacant space, vetting renters, researching an opportunity, handling tax records)
3. Automate these processes and offer an online, software-as-a-service tool suite
4. Monetize the service with a low monthly fee, nominal share of transaction price, or through ad sales
5. Connect these small businesses or individuals to large markets (or create them) with automated advertising, inquiry support, booking, vetting, etc.
6. Help people on the other side of the transaction, too, such as with online booking, online payment, and online management of requests.

Point: How you get a product to market may be as important as what you get to market.

Story: The previous post looked at product systems innovation to build a new car. Going a step further: some companies expand the systems thinking to include distribution and service. Consider Tata Motors, which created the world’s cheapest car, the Tata Nano. To reach a retail price of $2,000, Tata focused on the costs of every system of car, including the system for distributing and selling the car. To keep costs low, Tata created a modular design and an innovative distribution model. Tata will manufacture modules centrally and, in some cases, ship the cars as kits to local entrepreneurs who will assemble & sell them. Tata designed to the modules to be glued together rather than welded because gluing is less expensive and doesn’t require costly welding equipment. Tata will also train the entrepreneurs to do servicing.

Similarly, Hindustan Unilever pioneered a distribution model in 2001 to get its personal care products into the hands of rural villagers. A significant fraction of rural villages lack paved roads, making traditional truck-based distribution very difficult. The company developed a network of 14,000 women and women-owned co-ops to serve 50,000 villages. The women handle the logistics and door-to-door retailing of a range of personal care products. To address the needs of the market and the novel distribution system, Hindustan Unilever changed product packaging. By using this approach, Hindustan Unilever does not have to deal with the problem of moving product in rural India. The women or their employees come to the company’s urban distribution centers to get the product.

Action:
* When designing new products or services, consider how those products will be distributed.
* Think about the role that local entrepreneurs or business partners can serve
* Design the product to support the distribution channel (e.g., modularity, ease of assembly, packaging, etc.)

For more information: Vijay Govindarajan discussed Tata Motors’ strategy at the HSM webinar on March 18 and will be speaking at the World Innovation Forum being held May 5-6, 2009 in New York City

Hindustan Unilever’s distribution model: Discussed at MIT Center for Transportation and Logistics Roundtable on Supply Chain Strategies in Emerging Markets led by Dr. Edgar Blanco.